34 States Now Require Sales Tax from Online Buyers

Unfortunate news for online shoppers (and sellers, too, since a seller's price becomes less competitive)...

Buyers will now have to pay taxes in 34 of the 50 US states! eBay will take the tax portion of the total paid by the buyer. Here's the message that eBay sent me:

As you may be aware, 11 new states have adopted Internet Sales Tax policies as of October 1, bringing the total to 34 states that now require the collection of sales tax. As the impact of this tax law becomes more apparent, PayPal and eBay are making changes that will make Internet Sales Tax collection less complex for buyers and for you.

Starting in November 2019, the way taxable transactions are processed and how taxes are collected for remittance will change, as follows:

• In states where eBay is required to collect Internet Sales Tax from buyers, order totals sent for processing will reflect the gross order amount inclusive of tax.
• Once settled, the tax amount will be automatically deducted for remittance to the applicable taxing authority.
• A record of the sales tax portion of the order will be available on the Seller Hub Order details page and through our Download order report.

Please note the applicable tax will continue to be paid by the buyer and you do not need to take any action.
We understand that the holiday selling season is nearly upon us and we are working to make this transition as smooth as possible.
Learn more about Internet Sales Tax in the eBay Seller Center. If you have questions about how Internet Sales Tax may affect you, we recommend consulting with your tax advisor, or our partners Avalara and TaxJar.

As always, thank you for selling on eBay.
Sincerely,
eBay Team​

 

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It was a really stupid and destructive decision to rule that sellers everywhere need to be responsible for tracking, calculating, and remitting taxes according to the fickle whims of every locality in the US. Heck, I sure wouldn't know how to calculate whether a particular address in my own region should be taxed at 6.75%, 7%, 7.25%, or 7.5%. Never mind how to calculate tax on a gold coin (non-taxable) mounted in a gold bezel (jewelry, taxable). And I'm supposed to calculate accurately for a bidder in Left Armpit, Kentucky?

Pass a rational nationwide e-commerce tax structure, then start enforcing it. Oh, sorry, I used that nasty nonsense word "rational" in relation to financial legislation.

 

LOL.....Rational with politicians? With the risk of becoming political in this thread, I opt for stupidity.......

 

I was thinking along the lines of 0 online sales tax vs. paying online sales tax...

 

As I'm sure most people would -- but I like having the option of buying locally, and the effective tax advantage on online sales (since most people scoff at use-tax laws) really was endangering that option.

I just wish they'd imposed a solution that wasn't so very burdensome on sellers.

 

If you read what Ebay posted, the seller isn't responsible for figuring the tax amounts as it will be done automatically and remitted automatically, the cost and burden on the buyer, not the seller.

 

Yes, the burden of tax collection is no longer on the seller side, as that's the policy that eBay will implement. It benefits them to hold tax funds until they hand them over to the government, even if it means holding onto the millions of dollars in taxes to accrue a "little" bit of interest. It would have been a nightmare for sellers to figure out the sales tax for each state, and eBay took responsibility for automating those charges - great! Though, some states made it mandatory for the marketplace (eBay) to manage those taxes, so eBay applied it universally.

But the greater impact I see is that most states now require sales tax for online purchases. That'll make buying more expensive to the consumer.

So now, if I buy $100 in coins on eBay, the state collects say $2 on top of that, and in response to the growing number of states collecting online sales taxes, eBay takes ownership of the tax collection. Is that the correct assessment for those in affected states?

 

Is there a link to eBay's full statement? I'd like to know if this applies to all states are just those with an internet sales tax. My state doesn't have an internet sales tax (although our governor is trying real hard to make it happen), and it also has a sales tax exemption on all precious metal sales.

 

I posted the entire statement that eBay made.

But yeah, I too would like to know which states are implementing this sales tax.

 

Yes, eBay is taking the hit on bookkeeping for tax collection. My concern is that even eBay will have a hard time getting it right. How will they determine whether an item I buy is taxable jewelry or non-taxable bullion/coins? By category? Does that mean if I find somebody's listed a nice coin under Jewelry (making it eligible for Bucks promotions and gift-card purchase), I'll be charged tax on it?

 

My guess is they'll err on the side of caution (and covering their own you-know-whats) by applying a tax if there's even a hint of uncertainty. If they do so in error, it'll be up to you to challenge it, if you feel like expending the time and effort. A lot of people won't.

 

I have a question that might have an obvious answer. In the case of returns will the buyer have the tax portion returned and if so would the seller be responsible?

 

If the seller never sees the money collected for taxes, I can't see how the seller would be responsible in the case of returns. eBay collects and remits it; eBay would have to refund it.

Edit: oh, dear, I'm arguing on the basis of common sense again. Never mind.

 

Ha. Thanks. Maybe in that case there is no obvious answer. Also dealing with PayPal. Guess I’ll just wait and see.

 

I haven't bought many items from ebay and will only buy if the prices, including sales tax to be collected are reasonable. Also, the state of North Carolina requires that purchases from the internet did not include sales tax, the sales and applicable sales tax is to be reported on the state's income tax form. As George Orwell's 1984 states, "Big Brother is watching you!"

 

That is going to be the real problem since some states have sales tax, but have exemptions for various items or they are taxed unless they are over a certain amount, and other hoops and barriers that have to be navigated. Is ebay going to do all that? Or are they just going to go with "Your state has a 7% tax rate." and then apply it to EVERYTHING? Including things that are exempt.

 

Nah... they're going to base it on the category of goods and a small # of simple rules. And they're going to err on the side of collecting it. None of the states I've checked have any kind of safe harbor or innocent error rule.

Back when I had a Texas sales tax permit, there was a $50 failure to file penalty, even if it was a no-tax-due return.


If they get it wrong they're just going to tell you to file for a refund with your state's tax authority. We've already seen reports of this.

 

Indiana is kind of like that, and you had better be sure you file even if you had zero tax to pay. We were late one month. Had been sending 300 to 500 each month. Just a letter from them saying that they hadn't received the tax payment and that based on our payment record they estimated we owed $5,000.

Had a devil of a time with the continuing to dun us for sale tax for several months after we closed down the business as well ($5,000 each time)

 

New York State also charges a penalty if you fail to file the Sales Tax forms on time even if you don't sell anything and no tax is due. It was such a pain in the butt, I gave it up as my selling season was 3-4 months and the forms at that time had to be filed quarterly.

 

The point of course is not to collect 30 or 50 individual stories but to point out that if you sell as an individual of a certain size you will have to adhere to 30 or 50 different rules.

As a seller you may not like eBay applying rules incorrectly but it's a heck of a lot less work on you...